AOD Watch

The high-yield exchange-traded fund Alpine Total Dynamic Dividend Fund (AOD) has simultaneously moved to bull phase on the macd and bear phase on Person's Proprietary Signal. What's with that?

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
AOD $6.61

At 1:21 p.m. Eastern

I'll say straight up that AOD is trading 1.4% below Friday's close and has 2.2% intraday. So I'm inclined to give more credence to the bear than to the bull.

It's a fine illustration of how important it is for traders to think about the time span of their signals.

The standard macd is constructed out on the basis of two moving averages: The 12 day and the 26-day. So it's a slow mover. That's a good thing for avoiding whipsaws. It's a bad thing with a sudden price move, which costs money before the moving averages can react.

The Person's is, as the name says, proprietary. It's a black box, and I have no idea how it works or what periods are used as averages in its construction. The inventor, John Person, knows, but he ain't sayin'.

Empirically, though, we can say that the pps responds to price changes faster than the macd, or than the parabolic sar for that matter, although slower than the fast stochastic. The pps, then, is prone to whipsaws, but when it says "get out" and that signal is accompanied by a significant adverse price move, then it's probably a good idea to listen.

Reversal Levels

• $7.00, +5.9% (near-term swing high)
• $6.61 <== You are here.
• $6.04, -8.6% (near-term swing low)

On the three-month chart, AOD peaked on April 21 at $9.36. About a third of its portfolio is in Europe (according to the annual report), so it is very sensitive to fluctations of the euro, and we all know which direction the euro has been fluctuated of late. Can everyone say, "Four-year low"?

The 20% AOD dividend, paid in monthly installments, goes a ways toward mitigating the loss, but nowhere near entirely.

Big picture, the price has broken through support and is trading at levels last seen in April 2009. The March 2009 low was $4.22, so if that's taken as the firmest downside support, AOD has a ways to slide.

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Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.